Preventive detention for prejudicial foreign exchange activity survives repeal of the earlier exchange control statute.

The Supreme Court of India held that a detention order under section 3(1) of the COFEPOSA Act was not invalidated by repeal of the Foreign Exchange Regulation Act, 1973 and its replacement by the Foreign Exchange Management Act, 1999. Preventive detention under that provision is aimed at stopping prejudicial foreign exchange conduct, not at punishing a criminal offence, while FEMA continues to regulate foreign exchange dealings and penalise unauthorised transactions. Because the two enactments operate in different fields, repeal of the earlier statute did not impliedly repeal the detention power. The challenge to the detention order therefore failed.

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Issues: Whether a detention order under section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 could be sustained after repeal of the Foreign Exchange Regulation Act, 1973 and substitution by the Foreign Exchange Management Act, 1999.

Analysis: The preventive detention power under section 3(1) is directed to stopping conduct prejudicial to conservation or augmentation of foreign exchange and does not depend on the conduct constituting a criminal offence. The Foreign Exchange Management Act, 1999 continues to regulate foreign exchange dealings, prohibits unauthorised transactions, and provides penalties for contravention. The two enactments operate in different fields: one is preventive, the other regulatory and penal. Accepting the view that repeal of the earlier Act destroys the detention power would amount to an implied repeal of a substantial part of section 3(1), a result the law presumes against unless the provisions are plainly repugnant. The detention order therefore remained legally supportable.

Conclusion: The detention order did not lapse merely because the earlier foreign exchange statute was repealed and replaced by the Foreign Exchange Management Act, 1999; the challenge to that extent failed, in favour of the Revenue.

Final Conclusion: The preventive detention framework continued to apply to prejudicial foreign exchange activity notwithstanding the shift from the earlier regulatory regime to the later one, though no direction for surrender for the remaining detention period was considered warranted.

Ratio Decidendi: Preventive detention for conduct prejudicial to foreign exchange may be sustained even where the underlying regulatory statute has been replaced, because such detention is preventive rather than punitive and does not require the conduct to constitute a prosecutable offence.

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